Oxbridge Re confirms 20% & 42% return targets for tokenized reinsurance sidecar tranches

Oxbridge Re Ltd., the Cayman Islands based reinsurance company, has now confirmed its two tranche offering of tokenized reinsurance securities that will fund its collateralized reinsurance sidecar vehicle Oxbridge Re NS for 2025, with 20% and 42% return targets.

Oxbridge Re launched is Web3-focused venture SurancePlus back in 2022, utilising digital ledger technology to create tokenized reinsurance securities using the Avalanche blockchain.

These tokenized reinsurance securities act as a funding mechanism to support the firm’s collateralized reinsurance sidecar vehicle Oxbridge Re NS, with investors that buy into the securities gaining access to reinsurance-linked returns generated through the sidecar and its quota share arrangements with Oxbridge Re.

The reinsurer raised $2.4 million through its first sale of digital or tokenized reinsurance securities, which were named DeltaCat Re in 2023.

That $2.4 million of capital was used to support collateralized reinsurance contracts, underwritten via its sidecar structure, Oxbridge Re NS.

The DeltaCat Re tokenized reinsurance sidecar securities realised a 49% return for their investors, surpassing initial and updated expectations.

In early 2024, Oxbridge Re raised $2.88 million for its sidecar structure through a series of EpsilonCat Re tokenized reinsurance securities, issued by its subsidiary SurancePlus Inc, which had a target return of 42%.

Those EpsilonCat Re digital reinsurance securities run through till the mid-year of 2025, at which point their returns will be known.

We then reported in November 2024 that Oxbridge Re was planning to expand its tokenized reinsurance securities offering, with the launch of a second tranche of notes that had a lower risk-return profile, saying at the time that a high yield token would target a 42% return, and a balanced yield token would target 22%.

That latest offering, for the 2025 to 2026 reinsurance contract year, has now opened and Oxbridge Re has confirmed this two tranche approach, one being higher-yield and one a lower-yielding reinsurance investment opportunity.

Oxbridge Re is launching offerings for EtaCat Re securities that will have a 20% return target and ZetaCat Re securities that have a 42% return target, with both supporting its provision of reinsurance to property and casualty insurers in the Gulf Coast region of the United States through the 2025 to 2026 wind season.

The company said, “These blockchain-powered offerings open access to an asset class that was previously exclusive to institutional investors and ultra-high-net-worth individuals. Now, a wider range of investors can access SurancePlus’ tokenized reinsurance securities, targeting high-yield returns backed by Real-World Assets (RWAs) through real-world reinsurance contracts.”

Denominated in shares of $10 each, the funds raised through the offering of these securities will be invested into collateralized reinsurance contracts supporting the Cayman Islands sidecar structure Oxbridge Re NS.

Jay Madhu, CEO of Oxbridge, said, “We are excited to launch this year’s offering, especially with the introduction of our balanced-yield, security-backed token, which targets a broader investor base with a projected 20% return. SurancePlus is democratizing an asset class that was once exclusive to high-net-worth individuals, now allowing investors to participate with as little as $5,000.”

Oxbridge Re is utilising digital asset technology and architecture, in order to facilitate fractionalised investments into reinsurance-linked securities, which is an interesting approach.

These remain small, in issuance terms of tranches seen so far, but the reinsurer continues to plough ahead with this technology-based approach to reinsurance investments and it will be interesting to see what can be raised for the 2025 contract year.